Insurance company Instant Life is hoping that having Absa as its controlling shareholder, and having access to its distribution channel and the bank’s millions of customers, will allow it to achieve exponential growth over the next five years.
Bryan McLachlan, Instant Life CEO, said that the company, which focuses on selling life insurance over the internet, was looking to grow its customer base from 15 000 to 240 000 within five years.
“We are looking to double in size every year for the next five years,”
As a result of such significant projected expansion, Instant Life is forecasting its staff numbers to grow from 70 to between 200 and 300.
Absa, which has 9.2 million local customers, bought a 75% stake in Instant Life for R100 million last year, and the competition authorities approved the acquisition with effect from April 1. Venture Capital Works holds the remaining 25% stake in Instant Life.
Jannie Venter, managing executive for Absa Life, which is one of South Africa’s largest insurance companies, with 4.5 million local clients, said Absa bought a stake in Instant Life because its technology included a “very smart decision tree” that included 55 000 question permutations.
Absa Life, which already sells life insurance, makes up about 7% of Absa’s total business.
Instant Life’s swift online process provided for a quality underwriting outcome that cost less than other channels and was convenient for clients, Venter said.
“Instant Life has a well-developed online platform,” he said.
Absa also bought into Instant Life because of the synergies between the company and Absa’s insurance business.
Absa would continue to operate Instant Life as a stand-alone business, and the bank has an option to buy out the remaining 25% over the next five years.
“We want to retain Instant Life’s unique character and integrate where it makes sense. We are excited by the potential of the business,” Venter said.
Instant Life, which has 1Life, Outsurance and Different Life as its direct competitors, started as a pure play life insurance company seven years ago.
McLachlan said Instant Life had approached a number of companies with the aim of being associated with a big brand with a significant distribution network.
One of the advantages of the company is that a prospective customer can go to the company’s website, complete an online questionnaire and get life insurance within about 20 minutes, compared with the process offered elsewhere, where it can take two weeks.
“The quick, online process offers customers convenience and strips out a big amount the of cost, which allows us to have a small team,” McLachlan said.
After initially selling life insurance through its website, Instant Life has added a call centre, and now 80% of insurance sales deals are completed though the call centre and 20% are completed online.
Instant Life typically has sophisticated customers who are professionals working in IT, or small businesses including doctors, accountants and attorneys, as well as people living in remote areas.
Another competitive factor, McLachlan said, was that Instant Life’s life insurance premiums were less expensive than its competitors in the field. It received this feedback from reinsurers, the hippo.co.za website and directly from customers.
Instant Life’s life insurance premiums are typically 30% to 40% cheaper than what the major insurers offer, and 20% to 30% cheaper than insurance companies that sell insurance directly to the public.
Another element of Instant Life’s business is that it recently launched wearable technology.
When a customer agrees to wear a Fitbit – a device that tracks your activity, exercise, food, weight and sleep – Instant Life grants them a 15% discount on its insurance premiums.
“This is a new product that we have been piloting since December,” McLachlan said.